LM Ericsson Telephone Company
) reported a Non-IFRS loss (excluding the gains from Sony
Ericsson) of 21 cents per share in the fourth quarter of 2012
compared to Non-IFRS earnings of SEK 0.81 in the prior-year
Profits during the quarter were primarily impacted by
operating losses in ST-Ericsson, the ongoing network
modernization projects in Europe and the underlying business mix,
with a higher share of coverage projects than capacity
Revenues in the quarter were SEK 66.9 billion ($10.1 billion),
up 5% year over year and 23% sequentially. Consolidated revenues
during the quarter were primarily driven by higher revenues
across the three operating segments.
surged 6% year over year and 31% sequentially. The year over year
sales growth was driven by strong activity in North America and
Japan due to continued mobile broadband investments and demand
for services. The sequential increase was attributable to higher
sales and a higher share of software sales.
sales increased 4% year over year and 15% sequentially. The
year-over-year increase was driven by Managed Services and
Consulting and Systems Integration. Now with operators increasing
their operational efficiency and reducing operating expenses
through transformation activities in the voice, IP and OSS/BSS
domains, the demand for professional services is on the rise. The
quarterly increase in sales was driven by Consulting and Systems
Integration as well as Network Rollout.
sales for the quarter grew 6% year over year and 9% sequentially.
The year-over-year sales increase for the segment was driven by
business support solutions BSS (charging solutions), mainly in
Latin America and Middle East. The yearly sales were driven by
the Telcordia operation, which contributed sales of SEK 0.6
billion ($0.09 billion) in the quarter.
However, the Multimedia brokering (IPX) business was divested
during the previous quarter, which impacted sales negatively both
annually and sequentially. The segment benefited from the strong
demand for OSS/BSS, driven by operators' focusing to improve
efficiency and adapt to mobile broadband business
Margins and Balance Sheet
Gross margin in the quarter was 31.1% versus 30.2% in the
prior-year quarter and 30.4% in the previous quarter. The
year-over-year increase was driven by higher Networks sales while
the sequential improvement was based on increased software share
and lower Global Services share. Operating margin for the quarter
was 7.1% versus 6.4% in the prior year quarter and 6.7% in the
The increase was driven by an improvement in Networks sales,
which was partly offset by continued efficiency measures
generating restructuring charges, which had a negative impact
of approximately 3%. The sequential margin improvement was
mainly driven by higher sales in Networks and improved gross
margin, partly offset by higher operating expenses and
Total operating expenses increased 5.1% to SEK 16.4
billion ($2.5 billion) due to higher restructuring charges.
Sequentially, expenses increased SEK 3.1 billion ($0.5 billion),
partly driven by restructuring charges.
Excluding acquisitions and restructuring charges, total
operating expenses amounted to SEK 14.9 b. ($2.3 billion) down 3%
year over year. R&D expenses amounted to SEK 9.2 billion
($1.4 billion). Selling and general administrative expenses
(SG&A) increased to SEK 7.1 billion ($1.1 billion) due to
Cash flow from operations increased 185.4% to SEK 15.7
billion ($2.4 billion), driven by reduced working capital. Cash
outlays for restructuring amounted to SEK 0.3 billion (0.04
Ericsson currently has a Zacks Rank #1 (Strong Buy) and
its rivals such as
) has a Zacks Rank #1 while
) have a Zacks Rank # 2 (Buy).
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